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Ford Killing All Sedans In North America — Blue Oval Bloodbath

26 April, 2018, 12:31 | Author: Melinda Barton
  • Ford seeks to accelerate profit margins, drop less popular models

The automaker said it will either fix or eliminate unprofitable global operations.

Specifically, Ford said that it will cut its North American auto offerings to two vehicles: the Mustang and Focus Active crossover, which presumably spells the definitive end of the Focus sedan in the United States.

Ford also promised to raise its operating profit margin from 5.2 percent to 8 percent by 2020, two years earlier than a previous forecast.

An extension of the statement from Hackett appears on a release sent out after the conference. Ford stock rose almost 3 percent in after-hours trading Wednesday to $11.40.

Cars being cut in North America are the Fiesta, Fusion and Taurus.

In other words? Passenger cars aren't making money, and crossovers/trucks are. There's also the potential for new cars combining the "best attributes of cars and utilities, such as higher ride height, space and versatility". We will have to make choices around how we disposition those businesses going forward. "It just won't be traditional silhouetted sedans that tend to be commoditized".

The move is bad news for sedans, but good news for trucks and crossovers. They don't, however, love actual cars like hatchbacks and sedans -as Ford has learned. Europe was the only region to turn a profit for Ford. That echoes the strategy General Motors has employed in selling its European business and abandoning several other countries, including Russian Federation.

Shanks said the company will cut $5 billion from capital spending from 2019 to 2022, reducing it from $34 billion to $29 billion.

Given the wholesale shift from sedans to SUVs and CUVs in the USA and Canadian markets, the Ford marque is going in big on what Jim Farley, executive vice president and president of global markets for the Ford Motor Company, calls "new silhouettes". "And we will do that". Next to get booted of the USA range will be the Fiesta and it will be discontinued by May 2019.

The company also says it has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected by 2022. Ford's marketing and sales division is likely to see a large portion of cost reduction. The plan was met with a tepid reaction from analysts and investors, who have been eager to hear more specifics.

We have looked at every single part of the business.

Ford's revenue worldwide increased 7% to $42 billion for the quarter. Higher net income of $1.7 billion was greater "than explained by a lower tax rate", but no further explanation was offered.

Ford's North American pretax profit fell 9.2 percent to $1.94 billion, with commodity costs accounting for more than the entire decline.



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